Sales Forecasting: A Must-Learn For Business Neophytes
You may say, “But I’ve never been in this business before. How can I possibly guess how many sales are going to come in?” The answer is, you must. You must do the very best guessing you can, because all other plans hinge on sales. And don’t despair. Many sources of information are open to you; and most cost nothing or very little.
A critical item in your financial planning is the sales forecast. The ability of your business to generate sales in sufficient volume at the proper price level determines whether your business can survive and grow. And because all other financial variables in your business depend on sales, you must exert great care to do as good a job as you can of forecasting them.
For example, you’d like to give it a shot to put up a printing company specializing on online printing jobs. You’ll find it wise to forecast sales by the month for two years and possibly three years ahead. It’s a good idea to try three approaches: optimistic/high estimate, pessimistic/low estimate, and realistic, which is somewhere in the middle. You can then get the best estimate of what might actually happen in your sales if you use any of these approaches. It is also an advantage that you know something about online printing or any business you’d like to start with, so you can have a feel for such things as the seasonality of the business and the daily, weekly, monthly, and quarterly pattern of sales.
In gathering your data for your financial planning, here are some of the sources in which you can find basic financial information that will be of great help to your sales forecasting.
Data from your own experience in the business. You can always review the things you have learned if you have been employed before that will be of advantage to your business.
Daily newspapers. Although not a prime source of financial information, you can still get several leads that will help you gain such data.
Weekly newspapers. The same holds for weekly papers. But your chances of getting other entrepreneurs who can help you are probably better than with the dailies.
The Small Business Administration (SBA). You should check with the closest office of the SBA to see what pertinent publications are to be had and what other help they can give you in gathering the financial information you’re after.
Banks. Your banker can very likely put you in touch with successful entrepreneurs in a business similar to yours. You can then talk with them about financial and other matters.
Chambers of Commerce or Business Development Departments in your community. It would be a good practice for you to see what help these organizations can give you.
Universities. The professors of management or finance courses in graduate schools can sometimes be helpful in your quest for information. They often seek live projects for their students. The best way to get help here is to make sure you know exactly what you want to ask; then identify the professor, call them on the phone or make an appointment.
Other similar businesses. Successful owners who have built their business from scratch can give you a wealth of information of all kinds. Take advantage of their hard-earned store of financial wisdom. Draw on them as well as on their marketing and other knowledge.
The foregoing are some, but by no means at all, the only sources of basic information available to you. Most of them are free; some can be had for a small fee. By pursuing these sources and the references given in most of them, you can track down what you’ll need to know so you can do your sales forecasting and other kinds of financial planning. And you can do it yourself. Indeed, that’s the best way, from then, you’ll become an expert in your own business.
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